Kemerovo, Russian Federation - OJSC "Kuzbasskaya Toplivnaya Company" (RTS/MICEX: "KBTK"), one of the fastest-growing thermal coal producers in Russia, is pleased to announce its operational results for the second quarter and 6 months ended 30 June 2011.
Quarterly Operational Results1
| Mln tonnes | Q2 2011 | Q1 2011 | Change, % |
| Coal production | 1,91 | 1,83 | 4% |
|
Sorted coal |
1,36 | 1,17 | 16% |
| Enriched coal | 0,19 | 0,16 | 24% |
| Sales volume, incl.: | 2,08 | 2,43 | -14% |
| Export sales volume | 1,67 | 1,40 | 20% |
| Domestic sales volume | 0,41 | 1,03 | -60% |
In Q2 2011 the volume of coal production increased by 4% quarter-on-quarter to 1.91 mln tonnes (Q1 2011: 1.83 mln tonnes). The volume of coal sorted by coal-crushing and screening units, which produce screenings and sorted coal products with high added value, increased by 16% quarter-on-quarter to 1.36 mln tonnes (Q1 2011: 1.17 mln tonnes). With the advent of the warm season the Company has significantly increased the production volume of “Kaskad” enrichment plant. The volume of enriched coal production increased by 24% quarter-on-quarter to 194 th. tonnes (Q1 2011: 157 th. tonnes).
Due to the traditional decline in coal trading activity on Russian market in Q2, the Company decreased the volume of coal sales by 14% quarter-on-quarter to 2.08 mln tonnes (Q1 2011: 2.43 mln tonnes), including 1.73 mln tonnes of coal produced by the Company and 0.35 mln tonnes of coal purchased from third parties.
During the quarter the Company sold 0.41 mln tonnes of coal on the domestic market, decreasing the sales volume by 60% quarter-on-quarter (Q1 2011: 1.03 mln tonnes). Conversely, in Q2 the volume of export shipments continued to grow and reached 1.67 mln tonnes, increasing by 20% (Q1 2011: 1.40 mln tonnes). As a consequence, the share of export sales in the total sales volume increased to 80% compared to 57% in Q1 2011.
In Q2 2011 the average price of coal increased by 2% quarter-on-quarter to RUR 1,175 per tonne (Q1 2011: RUR 1,155 per tonne).
The average domestic coal price net of VAT and railroad tariffs increased by 9% quarter-on-quarter and reached RUR 1,185 per tonne (Q1 2011: RUR 1,090 per tonne) due to stable high prices on the market and the growth of sorted coal products sales. In the US$ equivalent the price increased by 13% from US$37.4 to US$42.32.
The average export price net of railroad tariffs decreased by 3% quarter-on-quarter to RUR 1,173 per tonne (Q1 2011: RUR 1,203 per tonne). In the US$ equivalent the price increased by 2% from US$41.3 to US$41.92.The moderate decrease in the Company’s quarterly average export price was related to variations in the export shipments structure, which consists of miscellaneous contracts concluded at the end 2010 and the start of 2011 at different prices.
Year To Date Operational Results
| Mln tonnes | 6 months 2011 |
6 months 2010 |
Change, % |
| Coal production | 3,73 | 2,72 | 37% |
|
Sorted coal |
2,54 | 1,78 | 42% |
| Enriched coal | 0,35 | - | - |
| Sales volume, incl.: | 4,51 | 3,52 | 28% |
| Export sales volume | 3,07 | 1,64 | 87% |
| Domestic sales volume | 1,44 | 1,88 | -23% |
During the first six months of 2011 the Company increased coal production volume by 37% to 3.73 mln tonnes (6M 2010: 2.72 mln tonnes). Rising demand for the Company’s sorted coal products among Russian and foreign customers resulted in a growth of volume of coal sorted by coal-crushing and screening units by 42% year-on-year to 2.54 mln tonnes (6M 2010: 1.78 mln tonnes). The volume of high quality coal produced by "Kaskad" enrichment plant from the mining waste, reached 351 th. tonnes.
6M 2011 coal sales volume increased by 28% year-on-year to 4.51 mln tonnes (6M 2010: 3.52 mln tonnes) because of active export shipments growth. The volume of export sales increased by 87% and reached 3.07 mln tonnes (6M 2010: 1.64 mln tonnes). At the same time, the domestic sales volume decreased by 23% to 1.44 mln tonnes (6M 2010: 1.88 mln tonnes). Hence, the share of export in the total sales volume increased from 47% in 6M 2010 to 68% in 6M 2011. Among the Company’s largest export markets in 6M 2011 was: Poland – 54% of the Company’s total export sales (6M 2010: 35%), China and South Korea – 44% (6M 2010: 52%), Czech Republic – 1% (6M 2010: 1%), and Greece – 1% (6M 2010: n/a).
In the first half of the year the average price of the Company’s coal sales increased by 28% year-on-year to RUR 1,165 per tonne (6M 2010: RUR 907 per tonne).
The average domestic coal price net of VAT and railroad tariffs has reached RUR 1,117 per tonne, exceeding the result of 6M 2010 by 25% (RUR 892 per tonne). In the US$ equivalent the price increased by 32% from US$29.7 to US$39.1.
The average export coal price net of VAT and railroad tariffs for 6M 2011 was RUR 1,187 per tonne, or 29% higher compared to the same period last year (RUR 923 per tonne). In the US$ equivalent the price increased by 35% from US$30.7 to US$41.633.
Management of the Company is satisfied with the Q2 and 6M 2011 operational results.
The Company plans to release its unaudited interim 6M 2011 IFRS Statements on August, 24 2011. A conference-call to discuss the financial results will be held the same day at 5PM Moscow time (2PM London time). Conference call details will be issued separately.
For more information please contact:
OJSC "Kuzbasskaya Toplivnaya Company" (Kemerovo)
Elena Sarycheva
Head of public affars department
+7 384 236 47 62
For investor enquiries please contact:
OJSC "Kuzbasskaya Toplivnaya Company" (Moscow)
Anton Rumyantsev
Investor relatinons manager
+7 495 787 68 05
Notes to editors:
Company Overview
OJSC Kuzbasskaya Toplivnaya Company ("KTK" or the "Company") is one of the fastest-growing thermal coal producers in Russia. In terms of 2010 production volume, it was ranked 7th among the largest thermal coal producers in the country. In the ten years since its establishment in 2000, the Company has commissioned and launched three open-pit mines and an enrichment plant, achieving annual production volume of 6.8 million tonnes of coal in 2010. The Company expects to continue to grow its production volume, in particular, following the launch of the Cheremshansky mine in 2008 and ongoing investments into its high performance modern mining technology, aimed at achieving the aggregate structural capacity4 of existing mines of 11 million tonnes of coal per year.
The Company’s JORC coal resources totalled 402 million tonnes of ROM coal as of January 1, 2011 and proven and probable reserves amounted to 185 million tonnes of ROM coal, recoverable during the period of 2011-2030. The Company produces exclusively thermal coal, classified as grade "D" under the Russian classification system, with a naturally low sulphur and phosphorus content, as well as a relatively high calorific value.
The Company conducts mining operations at three open-pit mines, located in the Kuzbass area, Russia’s largest coal producing region. The Company’s mining operations are supported by an extensive production and logistics infrastructure, including its own railway network and facilities, which enable the Company to transport 100% of produced coal from the open-pit mines to the main railway hub at the long-distance railway network, operated by the Russian Railways. Furthermore, as the Company’s mines are located within 5 km from each other, a number of operations are centralized, thereby minimising overhead costs and expenses.
In 2010, the Company’s total coal sales amounted to 8.5 million tonnes of coal, of which 6.4 million tonnes were produced by the Company and 2.1 million tonnes were retailed after purchasing from other coal producers. The Company maintains a diversified sales structure balanced between export and domestic sales with approximately 56% of the coal sold to domestic consumers and approximately 44% exported, primarily to Poland, South Korea and China, in 2010.
The Company’s strong regional presence is supported by an extensive retail distribution network, located throughout the Kemerovo, Novosibirsk, Omsk and Altay regions of Western Siberia. As of 01 January 2011, the Company’s distribution network included 65 owned and operated points of sale and delivered 3.3 million tonnes of coal in 2010, positioning KTK as one of the principal suppliers of coal to retail customers in Western Siberia.
Consolidated IFRS 2010 Financial Highlights
1 The Company’s business is affected by seasonality of thermal coal demand in Russia and globally. By this means its quarterly operational results can be subject to significant fluctuations. Historically, the Company has been producing more coal in Q3 and Q4 than in Q1 and Q2 of each year. However, the Company does not guarantee that this trend will continue in the future.
2 RUR are converted to US$ using average Central Bank of the Russian Federation exchange rates for each period (Q1 2011: 29.16 RUR/US$; Q2 2011: 28.01 RUR/US$).
3 RUR are converted to US$ using average Central Bank of the Russian Federation exchange rates for each period (6M 2010: 30.06 RUR/US$; 6M 2011: 28.56 RUR/US$).
4 The maximum production capacity that the Company believes could be achieved (taking into account projected stoppages for planned repair and maintenance) in an annual period if the Company were able to process all the coal that could be mined using the Company’s existing mine facilities after acquisition of certain mining equipment and construction of three processing/enrichment facilities in accordance with its current capital expenditure program.
5 EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and loss on disposal of property, plant and equipment. EBITDA is not a measurement of the Company’s operating performance under IFRS and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with IFRS or as an alternative to cash flow from operating activities or as a measure of the Company’s liquidity.
